Page 10 - Policy Economic Report_Mar'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

? Merchandise trade imbalances widened. The United States trade deficit with China reached -
$355 billion, widening by $14 billion in the fourth quarter, while the US deficit with the
European Union increased by $12 billion to -$241 billion. Meanwhile, China’s trade surplus
reached its highest level since 2022. And the EU reversed previous deficits, posting a trade
surplus for the year.

? Trade remained stable in early 2025, but uncertainty looms. Mounting geoeconomic tensions,
protectionist policies and trade disputes signal likely disruptions ahead. Recent shipping trends
also suggest a slowdown, with falling freight indices indicating weaker industrial activity,
particularly in supply chain-dependent sectors.

The following key takeaways on tariffs were mentioned in the UN report: -

? About two-thirds of international trade occurs without tariffs, either because countries have
chosen to reduce duties under most-favoured-nation (MFN) treatment or through other trade
agreements.

? However, tariff levels applied to the remainder of international trade are often very high, with
significant differences across sectors. Agriculture remains highly protected, manufacturing still
encounters trade barriers in key industries, while raw materials generally benefit from low
tariffs.

? Developing countries face higher duties that limit market access. Agricultural exports from these
nations face import duties averaging almost 20% under (MFN) treatment. Meanwhile, textiles
and apparel remain subject to some of the highest tariff rates (import duties average close to
6%), limiting developing countries’ competitiveness in these industries.

? South-South trade (trade between developing countries) still faces high tariffs. For example,
trade between Latin America and South Asia faces an average tariff of about 15%.

? Tariff escalation discourages developing economies from exporting value-added goods,
hindering industrialization. This refers to the practice of applying higher tariffs on finished goods
than on raw materials or intermediate inputs. Designed to protect domestic industries, this tariff
structure also discourages manufacturing in countries that produce raw materials, creating a
disincentive to move up the value chain.

2. The Launch of the Human Capital Data Portal

In a significant move towards enhancing national development, the World Bank has launched the
Human Capital Data Portal. This innovative platform is designed to provide policymakers and
researchers with critical insights into education, health, labor, and other vital sectors, emphasizing the
importance of investing in human capital for a nation’s future.

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